Selling your business is a pivotal, life-changing experience. A well-executed business sale can provide financial security for you in retirement or can set the stage for whatever new business ventures you aspire to in the future. With so much at stake when you decide to sell, you need to know how to sell your business quickly at the highest price so that you can transition smoothly to the next phase of your life.
To sell your business quickly, there are five steps to market your business and find the right buyer who will be willing to pay top dollar.
How to sell your business quickly in five simple steps
Plan an exit strategy
We’ve previously discussed how important it is to have an exit strategy before you sell your business and we’ll highlight the importance here again.
The key point is that it is never too early to start thinking about your business exit strategy. It’s a plan you may tweak and adapt over the lifespan of your business, but planning early will ultimately help inform your business decisions and ensure you’re in a good position when it comes time to sell your business.
Organize financial statements and accounting records
One of the first steps that serious buyers will want to undertake is a review of your financial records. Having detailed, organized accounting records makes it much easier for prospective buyers to assess the health of your business and negotiate price appropriately.
Your financial document checklist could include:
- Inventory of all assets and equipment included in the sale of the business
- Current and previous (3+ years) of tax returns, balance sheets, and profit statements
- Any relevant agreements, contracts, licenses, patents, or loan documents
- Property lease documents (if applicable)
- Environmental reports
Document business operations
A potential buyer will find great value in any documents or resources you can provide that will help ensure a smooth, successful handover to new ownership and management of the business.
Business operations documents could include:
- An organization chart that shows how roles and duties are assigned throughout the company
- Employment agreements, benefits agreements, supplier and customer contracts that provide insight into how you are managing obligations to customers and staff
- Standard operating procedures that document how and when routine tasks are completed and provide an excellent reference resource as staff turn over or new staff join the team
Plan for the due diligence process
The due diligence process is an exhausting but necessary step in selling a business. Preparing for due diligence in advance can help reduce the stress and workload at this critical step in the process. These advanced preparations can really help to find someone willing to buy your business quickly.
In addition to gathering the financial and tax documents mentioned above, you will also want to gather any other documents that may come to light during the due diligence process. Examples could include any pending or threatened action or proceedings, or any IP-related litigation including the status of any settlement discussions. Transparency is key to attracting qualified buyers.
If you haven’t already done so, this is also a good time to enlist the help of your extended business team including your lawyer, accountant, personal financial planner, and broker.
A broker can provide you with a Broker Opinion of Market Value (BOMV) which will help determine the best price for your business.
Aggressively price your business for sale
Setting an appropriately valued price for your business can be challenging. Setting the price too high will only slow down the process as negotiations are drawn out, or worse, potential buyers will be put off and walk away. Setting the price too low means losing out on the hard-earned value you’ve put into your business over the years.
As a small business owner, it can be difficult to separate the personal value you have invested in your business from the actual value. In reality, there are many external factors that will affect the price of your business. This is where it is important to rely on the advice of reputable industry experts including your accountant and a business sales broker.
Business owners can find some assurance from the process of obtaining an accurate BOMV as it is a rigorous and thorough valuation process that takes into consideration all factors before arriving at the final valuation.
Much like selling real estate, an aggressively priced business will immediately catch the eye of motivated buyers resulting in a quicker sale.
Selling your business is a big decision with a long-term impact on you and your family. For more advice on how to sell your business quickly at the best price, work with an experienced business broker who can walk you through the process step-by-step.